Hey, all economists are hedonists! Yeah, that man in the dull tie over there. And that dismal scientist too. And that one staring at her spreadsheets on a flickering screen. Oh yes, hedonists.
Obviously, I do not mean we’re all whipping off our suits and partying on Ibiza like it’s 1999. Firstly, current economic conditions are different in several ways from those in 1999. Secondly, we’re not THAT ker-rrazy!
What I do mean is that the economics undergraduates learn today, involving using algebra to maximise utility functions subject to budget constraints (see Five Minute Economist’s Guide to a Utility Maximising Christmas for an idea of how this works) borrows much from the philosophy of Hedonists, as I have now learnt from Tomas Sedlacek’s “Economics of Good and Evil”. According to the Hedonist school of thought, nothing is intrinsically good or evil: the utility or pleasure that an act or good brings is what matters. Therefore the key to a good life is to maximise utility. This is in contrast to the Stoic school of thought, which holds that the morality or goodness of an act has nothing to do with the utility it brings: thus it does not matter if good deeds are unrewarded. What should matter to the individual is that he or she did a “good” deed.
Tomas Sedlacek’s book is not your run-of-the-mill economics book. For one thing, Adam Smith’s works don’t even turn up until over halfway through the book: the first half takes in myths from Gilgamesh, Ancient Greek philosophers, Hebrew thought and Christianity, in each case showing how the different philosophies have influenced society’s thinking, and what this meant for how people thought about economic problems. So the book explains different societies’ view of progress: the Epic of Gilgamesh suggests that people viewed progress and knowledge as a means to civilisation, the natural and good state for Man, whereas the Old Testament suggests that in Hebrew thought, moving away from nature was often accompanied by sin (for example, God regularly appears to be wiping out cities).
If anything, “Economics of Good and Evil” might be what economics books would look like today if Adam Smith had never written “The Wealth of Nations”, and was known only for his earlier work, “The Theory of Moral Sentiments”, which discussed how ethics and morality are the building blocks of society, and interestingly suggests that Adam Smith was strongly influenced by the Stoical – not Hedonist – school of thought.
The key message of the book is that since the Wealth of Nations, we have lost the ethical dimension to economic questions, pretending that in economics “good” and “bad” don’t exist, when they so obviously do, and that consumption is the way to maximising happiness. In common with some of the new research on happiness economics, Tomas Sedlacek argues that we don’t know what is good for us, or what makes us happy, and happiness might not be best achieved by making it an explicit goal, but that it instead is a by-product of other actions.
Perhaps it’s time for me to get some pre “Wealth of Nations” reading material on my list.
More information about the book is here.